Learn the process flow of how product allocation can be used in SAP Advanced Planning and Optimization (SAP APO) Global available-to-promise (Global ATP) to meet customer requirements by managing the supply of scarce products. The system can perform availability checks in conjunction with product allocation checks.

Key Concept

Availability checks, also known as available-to-promise (ATP), are used to check if the requested product can be delivered to the customer in the requested quantity and within the requested time. Product allocation is one of the availability check methods provided by SAP Advanced Planning and Optimization (SAP APO). Product allocation gives businesses the flexibility to manage the supply of scarce products so that you avoid allocating all the supply to one customer or region. Instead, you can do an allocation so that each customer or region receives an allocated amount.

SAP Advanced Planning and Optimization (SAP APO) provides multiple methods that can be used to carry out an available-to-promise (ATP) check. Each of the methods is used per the particular business requirement. An availability check using product allocation provides the flexibility to allocate products using any criteria. The availability check is only successful if there is a product allocation for this transaction in the relevant period and this product allocation has not yet been consumed by other requirements. Product allocation is used when is there is any constraint in the business process—for example, a scarcity in the availability of critical components or a bottleneck in the production line.

An Overview of Product Availability Check – Product Allocation

Figure 1 shows the classification of availability check methods in SAP APO. In this article, I focus on product allocation.

Figure 1

Availability check methods in SAP APO

A Business Scenario

Consider an example of a simple supply chain network of a manufacturer consisting of a single plant and sales organization. Figure 2 diagrams the supply chain network for this scenario. PLANT1 manufactures two products, FG01 and FG02, both of which are very scarce and therefore in large demand. CUST1 and CUST2 are two large customers being served by the manufacturer, and they purchase both the products being produced. Since there is a bottleneck on the amount of products of each type that can be produced, you need to carry out some sort of product allocation to ensure that both the customers get some fixed allocated quantity of each product. Without product allocation, only one of the customers would exhaust the entire inventory, thereby making the other customer get zero quantity. For example, since there is constraint on the quantity of products that can be manufactured, the customers who order first (e.g., CUST1) have the entire inventory of product available to them and thus can order in large quantity leading to a stock out. This outcome is not desirable.

Figure 2

A business scenario

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Alok Jaiswal

Alok Jaiswal is a consultant at Infosys Limited.

He has more than six years of experience in IT and ERP consulting and in supply chain management (SCM). He has worked on various SAP Advanced Planning and Optimization (APO) modules such as Demand Planning (DP), Production Planning/Detailed Scheduling (PP/DS), Supply Network Planning (SNP), and Core Interface (CIF) at various stages of the project life cycle.

He is also an APICS-certified CSCP (Certified Supply Chain Planner) consultant, with exposure in functional areas of demand planning, lean management, value stream mapping, and inventory management across manufacturing, healthcare, and textile sectors.